Are Taxes Historically High or Low? Chilling Secrecy, Clint Eastwood and the Rise of Common Sense

Okay, so it’s 2012 and you can expect a regular rhythm of postings that are… well… political.

== THE GREAT FURY OVER TAXES ==

To listen to Republicans, you would think we have the most oppressive tax rates ever, with the federal government hogging ever larger portions of the national economy.  Ever hear of Orwellian anti-truth?  That is where you repeat the exact opposite of the truth and people start believing it.

Top Federal Marginal Income Tax Rate From 1913 to 2011

But drop by and look at the actual facts. See this compilation of income tax rates.. Tax rates are at historic lows. And  this is for earned income. Rates for dividends and capital gains are even lower – by half - than what you see in the figure!

In the 99 years that we have had the income tax, rates for top earners were lower than they are today only twice: 

1)  during the 5 years before the US entry into the First World War in 1917, and

2) during the brief stretch from 1925 through 1930… when a massive asset value bubble pumped the economy into the Great Depression.

Also note this. They are LOWER for the middle class, under Obama, than they were under Bush. The “Obama tax hikes” are purely mythical.

That’s it. Today’s top rates are currently lower than at any time since 1930… and ironically that includes half of the HOOVER Administration preceding FDR. In other words, the hiking upward was first done by the same 1930 Republican Congress that brought us the Smoot-Hawley Tariffs!

Just to make this clear, so you rub it in your crazy-as-Fox uncle, income tax rates are lower than at any time in 80 years.

The other big fact is the fraction of U.S. national GDP taken by the federal government.  Fox’s uncles swear that this is at an all-time high. In fact, the federal share of GDP is at its lowest since 1950.

Be entrepreneurial.  Make Adam Smith proud and use all this to make money. Seriously. Lure your nearest Tea Partier to make grand declarations about the oppressiveness of recent tax rates and the growing federal share of the economy and then demand a wager!  Only… get it in writing.

== Chilling Effects ==

What exactly are your online rights? What protections are offered under the First Amendment and intellectual property laws? Here are details expanding on last time:  Chilling Effects offers an extensive database of info about copyright and trademark infringement, fan fiction, cease and desist notices, issues of anonymity and freedom of expression. A joint project of the Electronic Frontier Foundation and Law Schools at Harvard, Stanford, …Berkeley and the George Washington School of Law, Chilling Effects is a first stop to determine your legal rights in the on hot issues in the ever-evolving online world.

I’ve been known to differ over matters of emphasis with my friends at EFF. I am far less worried about what governments and the mighty “see” about me — and history shows little hope of stopping them — while I am more vexed and angry over government and the mighty hiding from citizen supervision. Still this is a good and important move and I am glad these folks are doing things like this!

9780199890262_p0_v2_s260x420Most civil servants… and even a lot of politicians… are sincere. They believe they are protecting us and/or defending freedom. The problem (for now) is that they can be counted on – via human nature – to have the inherent reflex of rationalizing how they must wield power for the greater good and must evade (some) accountability of the kind that might hamper them in doing their jobs.

1) They (and we) must be convinced that what’s important is to defend and promote… the secular trend toward a more open world. The reason is clear and it goes beyond mere “goodness” of openness. It is the simple fact that our type of society is invigorated by the effects of transparency (though individual leaders are often severely inconvenienced) while all the cultures that oppose our way suffer from severe-to-lethal damage when washed in light. That is too great an advantage to ignore, even if you are a realpolitik-cynic.

2) Given that this secular trend is essential… and that human nature works against it… are there forms of sousveillance – or shining light upward – that can be applied to our own elites that will still leave them unimpeded in the practical fulfilling of their duties? Short term tactical secrecy is still vital for the effectiveness of military, police and Homeland Security functions, among others.

In EARTH I portray the legal sequestration of information being limited to short, 5 year terms unless a longer term is purchased at considerable dollar cost. In other words, there is a built-in bite and disincentive to claiming longer periods of secrecy, and with most secrets kept at the shorter, 5 year term, you have a reflex to say “I’d better behave generally well… or at least well enough to be forgiven… since this will all come out.”

3) As it happens, there are some lovely potential innovations that could increase our confidence in supervision while ensuring minimal interference in day-to-day operations. I talk about some of them elsewhere

== Clint Eastwood… Democrat? Or American? ==

Has there begun a jobs renaissance in America, especially in manufacturing?  There are definite signs of “in-sourcing” taking place.

Oh but that segues into Clint Eastwood’s Superbowl Chrysler commercial… and the subsequent Republican fire storm against him, by Karl Rove and others, for daring to suggest that the “bailout” of Detroit was actually a resounding success. 

Rove sniped “… Chicago-style politics, and the President of the United States and his political minions are, in essence, using our tax dollars to buy corporate advertising and the best-wishes of the management which is benefited by getting a bunch of our money that they’ll never pay back.”

Say what? Except that we’re getting every single penny back. Plus many millions more in taxes on now-profitable American companies that Rove and his ilk wanted to let go belly up? (After they did urge much bigger bailouts for their Wall Street friends.) Refusal to admit that the automaker loans were anything other than a towering, spectacular, 200% success is the act of a deranged mind.

Oh… BTW. Clint has said “I don’t recall ever voting for a democrat.” If a man like that has switched sides, it is because he has sanely realized that the GOP has “left him.”

== Some Fascinating Political Miscellany ==

LARGE_book_after_music_stoppedHere’s a fascinating one: “The lesson of the Great Crash was that unequal enrichment provokes asset bubbles, excessive demand for debt and, finally, economic failure. Now we are painfully learning that again.”  Read the whole article by Stewart Lansley.  But a key point.  The massive wealth that has been redistributed upward to a thousand or so billionaires and top corporations is not generating jobs or economic activity at anywhere near the same pace as the same wealth would have, if it remained with the middle class. Those “job creators are mostly sitting on mountains of cash.  Banks, flush with reserves, are lending very little. Cash-rich companies are neither building productive capital (supply-side’s justification) nor doing much hiring.

Sign the petition offered by Senator Bernie Sanders, for a Constitutional Amendment that declares that Corporations are not the same as people and can be regulated by Congress and the States.  I also recommend Kent Pitman’s blog on this topic.  

On the lighter side…. In New Hampshire there was an event carried on C-Span… the “lesser candidates’ forum” featuring 13 Democrats running against President Obama (all it takes is $1000 in NH) and 25 or so lesser known Fepublicans. See an article… but it pales next to the videos, including one of the “very silly party” candidate wearing a boot on his head, named “Vermin” who promises every American a pony.

Look at how a transparency (and tech-empowered) citizen hero caught villains with his flying drone. Snapping aerial photos of an illegal river of blood pouring from a slaughterhouse into a river.   Exactly what I spoke of in The Transparent Society  and especially the citizen action smart mobs I portray in my next novel!  

Recall my earlier blog urging the establishment — or rather RE-establishment — of the 90 year old transaction fee for financial trades?  At 0.1% per trade, this would scarcely be noticed by you or I, but would lessen the huge advantage grabbed by giant Wall Street houses through massive computerized trading systems.  Well, things are moving fast.  The French are now siding with the Germans in enacting such a fee.  The British conservative government, protecting the “City” bankers who got western civilization into this fine mess, are balking hard.

An interesting – if biased in-favor – article about President Obama does clarify matters as to whether he has either been a “socialist” or “betrayed liberals.”

And again…. Nehemia Scudder supporters! Order your bumper sticker!  Seriously, get people talking. It is a meme worth spreading. 

==For more on the Economy: Past, Present and Future

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11 Comments

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11 responses to “Are Taxes Historically High or Low? Chilling Secrecy, Clint Eastwood and the Rise of Common Sense

  1. But, but, if they’d just lower the taxes even more, then the big money folks would finally start with the job creation. They’re just waiting to make sure that we really do want more jobs. And no, Lucy’s not going to pull the football away this time.

  2. Dave Eave

    This clever graph leaves a lot out.

    The marginal tax rate is the rate on the last dollar of income earned. This is very different from the average tax rate, which is the total tax paid as a percentage of total income earned.

    ALSO! and most importantly, the percentage of people and/or households that pay any tax, after credits, refunds and whatever else they are calling it now is at an all time low.

    The converse is also true, as Obama & CO. keep spouting that the rich need to pay their fair share… The amount of income tax paid by the infamous 1% pay almost 40% of the income tax revenues.

    Something is clearly disproportionate here… and using statistics to shill a particular ideology is a large part of the problem.

  3. Dave, even in your own context you make no sense. If the rich pay a very low rate… and if they pay most of the net taxes… that absolutely proves that their share of the national income has skyrocketed.

    Now you think about that, then do what conservatives all absolutely refuse ever to do, and look back across 6000 years of recorded human history and admit who it was that oppressed freedom and – yes – MARKETS, in 99% of human cultures. the Owner oligarchs. They were always the woprst enemy of capitalism.

    Saying this does not demean capitalism… indeed, Adam Smith despised the oligarchy of his time! He knew that success breeds with a flaw in human nature to transform successful competitors into the enemies of competition.

    If you are happy helping to rebuild the cheating pyramidal social structure of the past, fine. But we fought a revolution against it.

  4. PS… wrong on another point. In an earlier political posting I pointed out that the top federal income tax rate – for esarned income – has seldom been lower than it is right now. Federal taxes, in general, are at one of the lowest points since 1912… suggesting that our current national argument about taxes ought to at least feature commensurately lowe rates of anger. (Oh, but indignant fury is the whole point. If it isn’t taxes, it will be something else.) ABove all, effective tax rates on the very wealthy are at their lowest since Teddy Roosevelt was president.

    One response was sent in “That’s federal taxes! But state rates have gone up.” Well, it’s a point that merits answering. (1) states vary a great deal, so you are free to move to a low-tax state and I know many folks who have. (2) Have a look at the Wiki site for “Tax Freedom Day.”

    Tax Freedom Day is the first day of the year in which a nation as a whole has theoretically earned enough income to fund its annual tax burden. It is annually calculated in the United States by the Tax Foundation—a Washington, D.C.-based tax research organization. Every dollar that is officially considered income by the government is counted, and every payment to the government that is officially considered a tax is counted. Taxes at all levels of government—local, state and federal—are included. Have a look at the site. Even taking all state and local taxes into account and averaged, the US falls way toward the bottom of tax rates for industrialized nations. And at rather low rates compared to American history. http://en.wikipedia.org/wiki/Tax_freedom_day

    It is a lie, people – this hysteria that is whipped up by foreign media moguls and oligarch-funded super-pacs. Wake up and smell actual facts.

  5. Dave Eave

    I will agree that there is a lot of shadow games abound, but on both sides of the argument. I am especially NOT HAPPY paying my taxes when the government is clearly not doing it’s job.

    If you think the pyramid is unfair, who gets to redistribute it? I think in your previous post you made a great argument about the diamond shape distribution of the past in this country. Yet when did we start to move away from that? Precisely when the Government escalated its ‘fairness’ programs.

    Taxes may be historically low, revenues relatively high but the burdens of the previous attempts to increase fairness in taxation such as “alternative minimum” and “earned income credits” are now in reality hurting the people in the middle and letting more and more people on the low end completely off the hook. ( do the math there ) There was a great article on ZeroHedge regarding actual disposable income levels. Turns out The Head Of A Household Of Four Making Minimum Wage Has More Disposable Income Than A Family Making $60,000 A Year.

    You have to adjust for inflation across the equation. Reducing taxes has, to a large extent, increased economic activity over time, and increased the amounts taxable and in most instances more than paid for itself with such.

    The justification for increased taxes by virtue of fairness is bunk. No amount of increased taxes can pay our bills at this point. The efforts to spend away are problems have failed. Let’s talk about where all this revenue is going. Let’s talk about the facts of our bill.

    Tax laws were written to encourage a certain type of business practice. Now we are calling the people following those rules cheaters.

  6. Sorry, but I disagree on most counts:
    1- “fairness” concepts are often malignantly socialistic, but NOT when they are based on the kind of principles expressed by Adam Smith in both Wealth of Nations and the Theory of Moral Sentiments. In the end, “fairness can be the most pro-competition and pro-enterprise thing! When fairness levels the playing field enough for true, vigorous COMPETITION to thrive.

    In fact, evasion of competition is what humans do, when they get oligarchic power and that was Smith’s big complaint. It is no accident that the time of highest tax rates ALSO coincided with our flattest social order AND the most vibrant startup capitalism in human history. These went together, despite propaganda calling them opposites.

    2) we are much closer to “paying our bills” than you think. Some adjustments in retirement age… plus dealing with the fact tat 5% of patients make 50% of medical costs, plus eliminating stupid land wars of attrition in asia, plus ending the war on drugs…. Eliminate the Bush top rate tax cuts and make taxation simpler. Voila, we’ll be fine.

    Oh… and believe again in science. Bush’s era was the ONLY one in which america did not thrive because of some new industry it invented.

    Wish I could talk more. There is livelier discussion over at the comments section under the version at http://davidbrin.blogspot.com/

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